Jagdish Bhagwati, a Columbia economist known for his vociferous support of free trade, recently surprised observers by signing on to a letter in support of the Employee Free Choice Act, along with a number of other distinguished economists. Now, he has a new piece explaining why he supports the legislation. To put it simply, Bhagwati recognizes the stagnation of workers' wages, but sees one common argument on the topic -- that this condition is a result of free trade policies -- as false. Instead, he believes that increasing the share of unionized workers will increase their wages. That in turn will relieve some of the pressure on the government to include labor restrictions in international trade agreements. I don't agree with all of Bhagwati's concerns, including the idea that including labor standards (or environmental standards) in trade agreements is merely back-door protectionism. The tension between preventing the exploitation of less-wealthy trading partners and the realization that what U.S. observers see as exploitation can be an improvement over the status quo is not a settled issue. I also think his analysis of different unions' approach to wage stagnation is over-determined: though Bhagwati is intent on assigning the AFL-CIO responsibility for trade concerns while naming SEIU the advocate of internal reform, any labor source will tell you that all the unions, and certainly the AFL, have been strong supporters of the legislation and backed up their rhetoric with resources. Nonetheless, the argument is a unique contribution to the debate over the Employee Free Choice Act, and is well worth a read.
-- Tim Fernholz
